The uncertainty surrounding church-owned housing in Jerusalem will not be being resolved and has making a critical actual property market failure within the middle of the town. That is the opinion of Hebrew College researchers who examined condo costs within the space over a 20-year interval. The examine discovered that condo costs on church-owned lands in Jerusalem confirmed a detrimental low cost of as much as 30% in contrast with different flats within the space, because of the uncertainty on their future. Previously 4 years, demand for these properties has fallen by about 20%.
The researchers imagine that the state of affairs is encouraging a speculative market, because of the nice dangers and nice profitability inherent in flats for many who buy them earlier than an settlement has been reached.
Contracts that may expire by 2150
This new examine was introduced at a convention of the Alrov Institute for Actual Property Analysis, the Kohler College of Administration, and the Carasso Program for R&D of Social Housing – Hagar, the College of Regulation at Tel Aviv College.
The church-owned lands cowl 500 dunams (125 acres) and embrace 1,100 flats in the most costly neighborhoods in Jerusalem – Rehavia, Talbia, and Baka. The land has been owned by the Greek Orthodox Church for hundreds of years. In 1951, the church leased the lands to Keren Kayemet Le-Israel (JNF) and personal people underneath long-term leases. Three years in the past, a few of the lands had been offered for NIS 750 million to Extell, an organization managed by US entrepreneur Gary Barnett.
The 1951 leases are scheduled to run out between 2034 and 2150, and the elemental downside is that, not like leases with the state (Israel Land Authority), the contracts don’t present any safety that they are often prolonged on the finish of the lease interval.
The researchers, Dr. Oren Rigbi from the Hebrew College, Jerusalem College of Enterprise Administration and Dr. Yehonatan Givati from the Hebrew College, College of Regulation, describe a state of affairs, which isn’t hypothetical, of younger households who signed leases with church buildings a long time in the past, and have lived in flats on church lands, and because the expiration of the leases approaches, there’s a actual concern that they are going to lose their property. Within the examine, the researchers sought to review how the market behaves on these lands. To this finish, they examined actual property market information compiled between 2004 and 2024 on flats on the church lands, in contrast with flats in shut proximity to them.
It was clearly discovered that the nearer to the date that the lease contract ends, the much less prepared potential patrons are to take the danger and purchase flats there. Between 2004 and 2020, flats positioned close to church lands and flats positioned on church lands carried out equally when it comes to the chance of buying an condo. From 2020 onwards, the chance of buying an condo on church lands fell by an general price of 20%.
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NIS 40,000 per sq. meter
As early as 2014, value gaps could be seen forming between flats owned and never owned by the church. At the moment, the common condo costs of each varieties was about NIS 29,000 per sq. meter. Since then, church condo costs have risen slowly to a mean of lower than NIS 40,000 per sq. meter, whereas non-church condo costs are already approaching NIS 50,000 per sq. meter.
In different phrases, a state of affairs has arisen through which, even when these will not be nominal value decreases, actual decreases have been recorded, in contrast with the worth will increase of close by properties.
Total, the researchers recognized a reduction reflecting decreases of about 30% in property costs for properties with 40 years or much less remaining on leases, and 10% when greater than 40 years stay on leases. The general common lack of worth in these properties is 10%-15%.
Intervention by the state is required
Rigbi mentioned in his lecture on the convention that what at the moment determines whether or not a deal is made on church land and the worth is “the higher concern of the vendor or the customer. The vendor fears {that a} resolution won’t be discovered and the worth of his condo will proceed to fall, or that the lease will expire. The potential purchaser fears {that a} resolution can be discovered for the state of affairs, after which the worth of the condo will skyrocket and he won’t be able to purchase. Rigbi and Givati see this example as a market failure, through which the federal government should intervene. It’s because there may be uncertainty about property rights, financial hurt, and inefficient allocation of sources, since patrons of flats on church land don’t essentially know methods to worth them.
The purpose is that stable condo patrons – who don’t want danger – keep away from buying such flats, lest they ultimately lose them. Their place is taken by folks whom Rigbi calls “these with a higher danger urge for food.” Rigbi says, “They might not be speculators by definition, however they’re prepared to tackle the danger that at some point their condo can be taken from them, whereas alternatively, they see that if an settlement is reached on the land, they are going to make a pleasant revenue.”
The answer to the anomaly will come when an settlement is reached, and even when the general public feels that the events (Extell, KKL-JNF, the homeowners of the flats on the church lands, and maybe even the state) are near an settlement and that the extent of certainty on the way forward for these flats is rising.
Revealed by Globes, Israel enterprise information – en.globes.co.il – on June 12, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
